Nine federal employee groups sent an urgent letter on April 5 to GSA Administrator Emily Murphy, Treasury Secretary Steven Mnuchin regarding an issue with tax implications affecting a large number of federal employees and retirees.
The letter states:
“It is our understanding that, as a result of recent changes pursuant to Congress’ passage of major tax reform, many federal employees are being presented with exorbitantly large bills for taxes owed, due to a change that eliminates the tax deduction exception for household goods services, but does not affect home sale’s excludable tax status. In practice, the policy has meant that many federal employees who relocate (or were previously relocated) to a new duty station – approximately 25,000 annually – are facing “gross-up” tax bills that, in some cases, are so large as to essentially negate the total value of one or multiple employee paychecks.”
The letter continues, “Clearly, this unintended policy outcome of tax reform holds the potential to be personally ruinous to affected federal employees. Moreover, the policy is specifically impacting those federal employees who already faced the daunting prospect of uprooting and relocating their entire lives in the name of public service.”
The employee groups called on GSA, pursuant to 5 U.S.C. § 5738 (b) to take the appropriate steps, including consultation with the Department of Treasury and Internal Revenue Service, to quickly remedy the policy error.
The letter was signed by the Senior Executives Association (SEA), the Federal Law Enforcement Officers Association (FLEOA), the FAA Managers Association (FAAMA), Federal Managers Association (FMA), the National Active and Retired Federal Employees Association (NARFE), the National Association of Federal Veterinarians (NAFV), the National Federation of Federal Employees (NFFE), the National Council of Social Security Management Associations (NCSSMA), and the Professional Managers Association (PMA).